Matrix organisational structure is one of the best HR practices. This blog will educate you and help you successfully navigate a matrix organisation, whether you're a manager or an employee.
Wondering what sort of a structure works for your organisation? Is a matrix organistional structure the answer? We got you!
No business can thrive without some working formula, a structure so to say, of monitoring and allotting tasks.
For long, companies relied on the linear vertical structure of operation - where each employee in a department reported to their superior and then, the superior would take it to the chief executive officer or someone similar in the hierarchy of the company.
No interaction was established nor expected between employees belonging to different departments. Soon, the inefficiency of such a protocol was realized for it impeded collaborative work within the business.
Today, the vertical organizational structure in companies has been replaced by a less restrictive yet infinitely more complex “Matrix organizational structure”.
This blog aims to shed light on this working structure and to familiarise the reader with its advantages, disadvantages and the ins and outs of how to successfully implement the matrix organizational structure in their office space.
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A matrix organizational structure features an intersectional grid of the traditional vertical hierarchical flow of work and a collaborative horizontal flow of reporting.
The hierarchical structure involves a classic flow of management in which employees report to a functional manager who then reports to the higher authority, in a tree-like representation.
A horizontal structure can be imagined as a sort of correspondence line between employees of multiple departments who report to additional project/product managers.
The matrix organizational structure combines the best of both worlds in a grid, allowing for collaboration across departmental blocks in the company, thus, bringing synergy between different silos of the business to effectively carry out demanding projects.
The matrix organizational structure looks like a rectangular network connecting various points across a business, as illustrated in the following graphic.
This structure of business works out perfectly for companies aiming to efficiently accomplish projects in conjunction with their daily operations.
Employees can carry out their daily functional commitments in the company whilst also dedicating effort to ongoing projects by collaborating with other department workers.
A sort of two-boss system is created wherein a single employee reports to their functional manager as well as the project manager for a specific project.
The need for an interdisciplinary perspective for the execution of complicated projects was first felt in the 1960s within the US aerospace industry.
The complex mission to put man on the moon established the necessity of concomitant brain power and expertise from professionals across different industries.
We can only imagine that astronomical projects of such magnitude could only be accomplished with the combined knowledge of chemists, astrophysicists, geologists, engineers and government officials.
So, there is no surprise that when aerospace firms needed to establish the intent and preparation behind their projects in front of government employees, they created specific organizational charts to showcase their project management teams.
This paved the way for what is today known as the “matrix organization structure”. Such a structure allows for the successful completion of large-scale, complicated projects that are beyond the grasp of a single department within an organization.
There is not only an augmented level of collaboration in this structure but also, a higher sense of accountability for the effective execution of designated responsibilities.
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Although it may seem unimaginably complex at first glance - almost resembling a spider’s web, the operational formula of a matrix organizational structure is rather straightforward. We shall explain the working by breaking down the structure into two lines that you must follow along.
The vertical line of the matrix structure represents the typical departmental function in a company wherein a functional manager manages their team.
An example of this could be the Human Resources team which corresponds with the Human Resources Manager, who finally reports to the executive officer.
Moving horizontally across the matrix we find the line of communication between employees of different verticals of the company who are managed by a single project manager.
For example, depending on the nature and demand of the project, the project manager could have members from the HR, Marketing, Finance and Production departments of the company.
This would in effect lead to two points of accountability for the members of a project as they would report to both the Functional Manager and the Project Manager.
The managerial roles across the matrix structure are the primary focus of this model - while a functional manager forms part of the common model of working adopted by most companies, it is the flexibility of the role and responsibility of a project manager that sets this model above others.
The functional manager would oversee the smooth performance of duties by each employee within a functional department of the company, say the Sales department or the Finance department.
The project manager on the other hand would bring together employees from different functional departments to yield high-productivity and out-of-the-box inputs for challenging problems in a collaborative effort.
A modern-day pharmaceutical company provides a great example of such interdisciplinary team effort wherein the Microbiology, Chemistry, R&D, QC and QA, and Manufacturing verticals all sit down to discuss analyses from their studies and past experiences and produce a medicinal solution for a plaguing disease such as in the case of the Covid pandemic.
For a matrix model to function effectively, communication and essential distribution of authority between the two managers are crucial.
Now, by effective communication, we could be looking at weekly or daily meetings of the functional and project managers to discuss their team’s progress and the shortcomings to be addressed for a particular project.
By distribution of authority, we refer to the nature of the role of a project manager - the flexibility of their position suggests that in some cases, they could be a mere collaborator but in others, their authority might supersede that of the functional manager.
Hence, maintaining a delicate balance is rather important to avoid internal conflicts.
Coming to the team members in the grid, they will be expected to fulfil their individual functional responsibilities within a department and also to perform separate tasks assigned by the project manager.
So, an efficient and consistent channel of communication must be established between each of the managers and the team members to ensure excellent flow of work and redressal of complications.
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Nothing goes on to explain a new concept better than live, working instances that have successfully applied the formulae.
In this section of the article, we will be elucidating the inner workings of typical matrix organizations through the case studies of two extremely well-known and established businesses.
These businesses are mega organizations with operative units spread out globally demanding an extremely efficient coordination and communication mechanism to ensure high productivity in meeting their goals.
The first example of a matrix organization structure that we are going to look at is that of the American multinational coffeehouse company that is all the rave today - Starbucks.
The company combines into an operational grid a functional hierarchy managed in a top-down manner and product-based/geographic divisions which can be viewed as the project managers.
At the company’s headquarters, a system of vertical functional hierarchy is followed at the top of which lie the Chief Executive Officer and other C-level executives. We can expect there to be various functional departments including
Finance, Marketing and Human Resources. These departments come up with crucial policies and decisions specific to their divisions that are implemented organization-wide and overseen by the C-level executives.
The corporation has regional divisions in its structure which aim to group together physical locations under the supervision of a single leader. This creates a two-boss system wherein each local manager at Starbucks reports to a regional head (for e.g., President of Asia operations) and a functional head (e.g., VP of Finance).
Additionally, there are product divisions to oversee the creative and technical aspects of the variety of products offered by the company (the secret menu is probably developed under a product division!). For a company like Starbucks, products become its focal point so having separate divisions for food items, coffee or merchandise is imperative for the expansion of its product catalog.
In brief, there are senior VPs of functional departments reporting to executive VPs who then report to group presidents who come under geographic division heads. The geographic heads are in turn, accountable to the global entity which finally reports to the head of the jungle i.e., the CEO.
Here’s the matrix organizational structure chart for Starbucks (covering three geographical divisions - a similar chart is also applicable for the North America division) to give you a visual representation:
The second case-study at hand is of the worldwide top footwear, apparel and equipment company Nike which has emerged invincible amidst stiff competition with other global brands. Today,
Nike operates in over 170 countries owing to its diversified management structure which has allowed the company to expand globally while catering to the varied local demands.
The company maintains a hierarchical ladder with the global HQ at the top, followed by regional headquarters and subsidiaries. Its management model is based on a matrix organizational structure at the global as well as sub-regional levels.
We will take a look at the sub-regional matrix organizational structure where employees report to two authorities - one from the functional department and the second from the product division.
So, essentially, a functional manager and a project manager (a crucial feature of the matrix model). The multiple reporting lines represented by the following matrix organizational chart exemplify the smooth execution of duties and a network of accountability that backs the success of the company.
The matrix organizational structure can be classified into three types, namely, the weak, balanced and strong matrix structures. Here, judgement about the efficiency of the structures must not be passed based on the nomenclature simply because the names are solely dependent on the nature of the distribution of authority and responsibility between the functional and the project managers. This distribution is rather fluid and may vary from project to project.
The weak matrix structure implies that the assignment of authority is such that the functional manager’s power transcends that of the project manager. The project manager has the role of a facilitator or coordinator in this particular instance, with their authority limited to launching only minor project management initiatives.
The strong matrix structure is the exact opposite - with greater power to allocate funds and resources, establish project timelines and distribute tasks, lying in the sole hands of the project manager.
Arguably, the balanced matrix structure warrants the equal distribution of power, thus, perfectly preventing the scale from tipping over to either side. The employees report to both the functional manager and the project manager with an equal perception of authority. Moreover, this structure maintains the horizontal line of power between the managers avoiding any power clashes, and allowing for open and effective communication to carry out the effective execution of the project demands in collaboration.
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To assess whether instituting the matrix organization structure into your company is the right move, just looking at its modus operandi might not suffice. It is equally important to establish what benefits your company might receive from the reorganization and what challenges it is likely to face.
If the former outweighs the latter, then you might be ready to take on the matrix model. So, this section of the blog is meant to familiarize you with the pros and cons of a matrix organizational structure.
For large companies with a global circulation of various products and services, the matrix structure is an absolute boon - allowing for the union of diverse professional areas to produce dynamic solutions.
One of the greatest benefits of the matrix organization structure is that it fosters interaction between various functional departments of the company. This is of prime importance when a project requires the perspectives of people from different professional backgrounds.
When brilliant minds that think in different directions are brought together, innovative and creative ideas are born which becomes necessary when a company is looking at expanding its limits with unfamiliar ventures.
The matrix structure allows for the utilization of resources, skills and technologies in a unified manner that might otherwise remain stocked within geographic/functional silos.
Essentially, the organization can make the best out of the resources available to them already through interdisciplinary cross-communication instead of outsourcing expertise and talent for a dynamic project.
The matrix structure helps in improving and speeding-up decision-making in the organization by distributing authority among multiple stakeholders.
Reporting to department heads and project managers who then report to higher authorities allows for clarification of the objectives of the project, helps set clear goals and makes execution faster.
As organizations emerge as global and confederated entities, it becomes imperative that the capabilities of the workforce stretch beyond their functional and/or regional boundaries.
The matrix structure fosters the development of new skill sets in the employees as they work with other team members and allows for the broadening of their thought horizons.
The matrix is ideal for a company to grow in a dynamic work environment. As employees meet their coworkers beyond the boundaries of each of their work demands, communication and creativity flow seamlessly.
This leads to a fruitful exchange of ideas and strengthened teamwork in the organization.
As bright and sunny as the pros of establishing a matrix organizational structure appear, there are some downsides and challenges that such a complex and integrated work environment bring to the table.
However, it must be noted that most of these challenges are preventable and treatable through extensive planning and anticipatory precautionary measures.
The matrix model is based on shared responsibility and distributed authority, which if not managed carefully, could lead to a blurry and unclear division in the roles of managers across the matrix. Therefore, there might be an inefficient level of accountability for work due to decreased confidence in leaders in their ability to get things done as resources become shared.
As communication and active collaboration by breaking through silo divisions is one of the primary goals of the matrix structure, it undoubtedly leads to a greater number of meetings. Meetings might be needed very frequently and involve more people than actually required because of the complex interconnectedness of the matrix structure. This would lead to greater costs being incurred by the company to arrange meetings more frequently.
As accountabilities and responsibilities overlap, conflicts over available resources are inevitable in a matrix organization. When bureaucratic roles increase, more approvals are needed to acquire basic resources in the company, this can lead to frustration and resource conflicts.
In a matrix organization, employees usually are handling the workload for the projects in addition to their usual functional roles in the company. Thus, it might become a task to keep track of all the responsibilities shouldered by a specific team member and lead to dissatisfaction in the workforce.
A complex organizational structure like the matrix organization structure demands hard work and consistent moves to tackle the knots in the system. Here are some great tips to maximize output and productivity in a matrix management model:
One of the greatest tips for any matrix organization is to rotate people around the matrix. By allowing employees to take on roles on the other side, not only would there be a fresher perspective across the board but also increase sensitivity in the team.
As long as the quality standards of the company remain untouched, creating explicit professional moves across the matrix can help grow the team and foster a positive outlook on the system.
It is not an easy task to maintain a complex structure like a matrix in your organization if you are not prepared for extensive planning and commitment to make it work. The best trick in this regard is to ensure that yearly planning cycles accommodate discussions about the successes and shortcomings of the matrix structure in the previous year.
Moreover, subsequent strategies must be planned to tackle the problems faced by the company to ensure that each side of the matrix fits together. This would help avoid dissonance over the coming year.
Harmony between the managerial roles is central to the successful working of a matrix structure. So, whenever designing a matrix structure for your organization, it is essential that a clear expectation is communicated to both the managers - functional and project.
This would avoid any conflicts over authority later on in the model. For e.g., for a certain project, the functional manager might be expected to look over the resources and finances while the project manager would be needed to supervise the intricacies involved and report on the project's progress.
Not only would this be beneficial in ensuring that a smooth pace of work is being maintained and nobody is lagging behind, but would also help in the performance evaluation of individuals.
For e.g., A weekly excel sheet can be maintained that employees must fill out with a summary of tasks that they have accomplished towards the project or pertaining to their functional roles.
Another great piece of advice for matrix organizations is to be accepting of the faults in their system instead of shoving sand over them. Coming to terms with the holes within the matrix would open channels of communication and help resolve the problems. Remaining ignorant of the faults and only praising how well the matrix is looking on the surface is not going to be sustainable.
So, make it a point to communicate the pros and cons of the matrix organizational structure relative to your company and build a positive tolerance within your employee pool for it. Foster trust in your organization that they are being heard and their problems will be resolved.
As Mr. Jeroen De Flander puts it “A matrix structure is not an excuse not to perform!” Therefore, do not let shortcomings of the structure come in the way of your organization’s outputs. Keep striving to make it work!
Project management tools are a great mechanism to centralize communication and exchange of files, meeting schedules and updates for a team or an organization. Having everything managed at the same location helps avoid unwanted confusion.
Undoubtedly, project management tools can help max out the positive outcomes of a matrix organization as well. Here are some project management software that will help your matrix structure thrive:
One of the central pillars of a matrix organization is communication and collaboration across various professional and geographic divisions.
Podio is unmatched in its capacity to offer a platform for project managers to notify the team about every tidbit related to the project. The manager can easily upload plans, meeting schedules and other important files for everyone to access in the same workspace.
It offers other features like scheduling meetings, and personal dashboards along with a social-media type feed to get everyone on board. It is compatible with other devices and just perfect for creating a streamlined flow of communication within the organization.
Trello is an easily customizable project management software that allows user to create their own platform interface to fit the needs of their current project. The flexibility of this software is great for any matrix organization with a fluid movement of roles across the grid.
Trello presents users with a Kanban board which allows for effective communication of project progression and allows easy assignment of tasks and documents of need.
The best part about Trello is that it easily integrates with other tools like GoogleDrive, Slack, DropBox, etc, and so, the team would have it all in one place without any fuss!
A matrix organization would fall flat on the face without a proper resource management regime in place. In a matrix structure, resources are primarily shared across the board making the organization susceptible to under-utilization of some and over-burdening of others.
A resource management tool like Wrike is a matrix organization’s best buddy. It provides real-time insight into the progress of a project - giving the project manager the opportunity to move things around in a timely manner. Thus, Wrike aids in quick redressal of team members’ queries, efficient distribution of tasks and maintenance of workload balance across the team.
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Matrix organization structure is best utilized by large companies that offer a variety of products and services at a global level. In such companies, it is imperative to complement the functional hierarchy with a horizontal flow either in the form of product divisions and/or geographical divisions. Product divisions allow organizations to focus on the research, development and financial considerations involved with the launch of innovative products. Geographical divisions within the corporation facilitate the implementation of company policies efficiently on local levels. Examples of companies incorporating the matrix organizational structure include multinational conglomerates like Starbucks, Phillips, Nike, Sony and Facebook.
A balanced matrix structure is a middle ground between the weak and strong matrix structures with equal distribution of power between the functional managers and project managers. The employees report to both the functional manager and the project manager with an equal perception of authority. This structure is considered to be the best among the three as it helps avoid any power clashes between the two bosses in the model and allows open communication for the successful delivery of project objectives and goals.
While the Functional organization structure is a long-standing classical structure of management in companies, the Matrix organization is relatively newer yet offers greater flexibility and collaboration within the company. The functional organization structure is the more common, tried and trusted structure in long-established countries involving the distribution of employees based on different functional/professional areas such as Finance, Marketing, Sales, Research and Development, etc. On the converse, the matrix organization structure combines the vertical functional hierarchy with a horizontal flow of skills and information involving cross-communication and collaboration among employees across different functional divisions.
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